The RFID industry is growing rapidly, and Avery Dennison has invested heavily in this space. Francisco Melo, president of Avery Dennison Solutions Group, discusses the drivers for this growth, as well as some of the recent innovations at Avery Dennison.

This story originally appeared in Printed Electronics Now.

Printed Electronics Now: How has the RFID industry changed since you started in it?

Francisco Melo: I’ve been in the industry for more than 20 years now and during that time RFID has moved from an early adopter technology in the retail apparel industry, to one that’s set for mass adoption across multiple vertical sectors. While early use cases focused on inventory accuracy, the technology has evolved over time to enable omni-channel models and new use-cases. In addition we are seeing progress in innovation surrounding products that have previously been hard to tag such as liquids and metals, which creates further opportunity in industries such as food and beauty.

In the past, return on investment (ROI) was quantified based on increased sales due to accuracy and reduced labor costs through automation. What we are seeing now is the ROI impact of RFID from a systemic view, the ability to gain visibility across the supply chain to reduce waste and ultimately improve customer experience.

We have also seen a shift in consumer demand whether that be in terms of purchasing – right time, right place or expectation for more transparency over how a product is made, what it is made of and the journey it took to get to them. RFID and item-level visibility is foundational to these use cases and it’s a really exciting space that continues to evolve.

Printed Electronics Now: In a major move, Avery Dennison acquired Smartrac’s inlay business in 2020. How has the acquisition benefited Avery Dennison and your customers, such as opening up new markets and bringing in new technologies?

Francisco Melo: The acquisition of Smartrac created the opportunity to combine two industry leading teams and build our brand presence in automotive and other emerging sectors. The combination of the two product portfolios created a broad offering for our customer base, providing more choice and flexibility.

As part of the deal we acquired four additional manufacturing sites (Kulim, Malaysia; Guangzhou, China; Fletcher, US and Wehnrath, Germany) this has enabled us to create a robust and flexible manufacturing footprint that services our customer base globally, which proved to be critical to ensure supply chain continuity during the pandemic.

Printed Electronics Now: One change I’ve noticed in the industry is that many major players have launched cloud platform, as Avery Dennison has done with atma.io. How is this integrated within Avery Dennison’s offerings to customers?

Francisco Melo: When we launched the atma.io connected product cloud in 2021, our vision was to enable organizations to gain end-to-end visibility of products throughout their supply chains, from source to consumer. By doing so, businesses can leverage the unique digital ID of each physical item to drive actionable insights that inform business decisions. It also creates the opportunity to connect with individual consumers, and extend use cases to provide authentication and transparency information.

The platform itself is open, which provides the opportunity for our partners to build their own apps and integrate with the platform, adding further value to customers. One such example is Hedera, which brings a native blockchain capability to the platform, allowing customers to account for the carbon footprint of items within their supply chains.

Printed Electronics Now: You spoke about the importance of RFID in the post-retail environment, as governments look to trace products through reuse and/or recycling. We discussed the addition of TexTrace and how it can help in tracking garments. How is Avery Dennison positioned to offer solutions here?

Francisco Melo: AD TexTrace is particularly exciting as it can be integrated into the garment itself, creating the opportunity for the unique digital ID to extend beyond point of sale, and enabling new use cases such as sorting and recycling once the product reaches its end of life.

AD TexTrace also combines the loss prevention benefits of EAS, removing the need to have an additional hard tag on the product. In the future you can expect to see more consumer-facing applications, for instance it will be possible to tap clothing with a smartphone to get washing instructions as well as details of how to re-use and recycle products. The opportunity to create truly ‘connected clothing’ where the value of the information stored within the unique digital ID lives beyond point of sale is extremely exciting.

Printed Electronics Now: What are some of the new opportunities you are seeing for RFID?

Francisco Melo: Food offers an interesting opportunity for RFID. On one hand you have supermarkets and quick service restaurants that tend to operate on extremely tight margins where managing the freshness of each item is critical for both profitability and food safety. Recently Chiptole announced the use of RFID for traceability and food safety.

On the other hand, there are use cases in the premium sector where authenticating the origin of high value items is important. This is particularly true for the premium drinks sector where companies such as JCB Wine are using NFC to inform consumers of the entire ‘story’ of the product with just a tap of their phone.

The automotive industry has been using RFID for many years to keep track of the hundreds of thousands of components in the assembly line. We are now seeing this extend to car tires where RFID can reduce fitting errors, ensure authenticity and convey crucial safety information.

RFID is increasingly becoming mandated by manufacturers across the entire sector and will play an important role in keeping the public safe, expected to grow further with the growth of the electric vehicle industry. We also recently joined the Global Battery Alliance – a partnership of 120 organizations and governments dedicated to promoting environmental sustainability within battery production.

Another exciting development is the use of RFID to enable self check-out. This is quickly becoming a key factor to reducing wait times at checkout, with customers reporting a 50% reduction in checkout time. This demonstrates the impact that RFID can have on not only inventory accuracy but also store operations and customer experience.

Printed Electronics Now: What is your outlook for the RFID business going forward?

Francisco Melo: The outlook is positive and we continue to feel confident about the adoption of the technology across multiple sectors and our ability to continue to lead in the industry.

One example of that can be seen in our announcement in January where we revealed a $100 million investment in Querétaro, Mexico RFID plant. This will be our largest RFID manufacturing site globally and will create 600 new jobs. We’re investing in the facility to meet the accelerating global growth for RFID and ensure we can meet the rapidly rising demand. As I said, the use cases for RFID are expanding across new categories and we expect the market to continue to accelerate.

Printed Electronics Now: Is there anything that you would like to add?

Francisco Melo: We see RFID as a key enabler for the circular economy. Gaining visibility into a product’s materials and history can tell a retailer or recycler all they need to know about a product including its age, authenticity and what it’s made of.

Digital Product Passport schemes such as that being developed by the European Commission will necessitate an overhaul of how companies capture and communicate this information to create more transparent supply chains. Not only will this ensure companies are accountable for the sustainability credentials of products in the supply chain, it will also create better understanding of the environmental impact of the products we consume from a consumer lens. We see that the benefits of RFID will continue to increase as new use cases emerge and the need for increased transparency accelerates.